Layered Fees

  

Categories: Trading, Banking

It's not just the commission. It's the fee for getting into the investment fund itself. And then the reimbursement of expenses to the broker who took his own jet to close the deal. Fee after fee after fee. They're layered like hair in the '80s, and they add up.

Caveat Emptor.

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Finance: What is Compensation: Advisory ...2 Views

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Finance a la shmoop what are advisory fee limits? well they're basically a

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price ceiling above which financial advisors can't go yeah I can't go they [Financial advisors in an elevator and hit price ceiling]

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can't touch that ceiling you know like hammer time, can't touch this...

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so when you invest in a mutual fund you pay two fees there's a commission

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and there's an annual management fee usually based on the assets you have

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with them under management like maybe it's one percent on the first hundred [Asset rises]

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grand that you have and then half a percent above a million or whatever

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but there is a third and insidious fee element in the world called advisory

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fees like how do you choose which fund to buy well if you have a financial

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advisor they'll walk you through the lists of mutual funds out there and [Ice cream flavors appear]

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index funds and all other set of funds as well well they're like a gazillion of

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them and then that advisor will charge you for their time in some form right

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someone's got to pay for their beach house well if you start adding up all

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the fees you're paying for arguably no better performance than had you just [Itemized list of fees appear]

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logged onto schwab.com or fidelity.com and bought an index fund hmm

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well then you're gonna start to pause here it starts to be a big number in

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those fees that eat meaningfully into your investment returns most buyers of [Pacman fees eating up money]

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mutual funds are not financial gurus yeah not like that they're doctors and

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lawyers and plumbing parts distributors and they really don't have a

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sophisticated understanding of just how badly they could get taken by

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unscrupulous financial advisors so the industry placed a series of structured

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limits to keep the non gurus safe from the financial predators when it comes to

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compensation and fee limits you know on advisory services and predators like [Tiger walking by]

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this guy

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